Unexpected credit losses could leave banks with inadequate loss-absorbing resources, says a new working paper from the BIS.
The BIS (Bank for International Settlements) has published a new working paper warning that high corporate indebtedness could present a potential roadblock to the economic recovery.
The paper notes that while the Covid-19 pandemic inflicted a profound shock on the world economy, it has been a non-event in terms of corporate credit losses, largely due to the financial lifeline provided to corporates by authorities.
The policy response to the pandemic has created a breakdown in the so-called bankruptcy gap, which represents the historical relationship between economic activity and the concurrent incidence of bankrupt…
Read the full article at: https://www.regulationasia.com/bis-paper-warns-of-delayed-corporate-insolvency-wave/
